Good morning everyone. Welcome to Shenandoah Telecommunications Second Quarter 2022 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Kirk Andrews, Director of Financial Planning and Analyst for Shentel.

Good morning and thank you for joining us. The purpose of today's call is to review Shentel's results for second quarter 2022. Our results were announced in a press release distributed this morning and the presentation we'll be reviewing is included on the Investor page at our website www.shentel.com. Please note that an audio replay of this call will be made available later today. The details are set forth in the press release announcing this call. With us on the call today are Chris French, President and Chief Executive Officer; Ed McKay, Executive Vice President and Chief Operating Officer; and Jim Volk, Senior Vice President of Finance and CFO. After our prepared remarks we will conduct a question-and-answer session. As always let me refer you to slide 2 of the presentation, which contains our safe harbor disclaimer and remind you that this conference call may include forward-looking statements subject to certain risks and uncertainties. These may cause our actual results to differ materially from the statements. Therefore, we have provided a detailed discussion of various risk factors in our SEC filings, which you are encouraged to review. You are cautioned not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements. With that, I will now turn the call over to Chris. Go ahead Chris.

Thanks Kirk. We appreciate everyone joining us this morning and I hope everyone is staying healthy and safe. Before reviewing the highlights of our second quarter results, I'd like to reflect on our progress over the past few years. We adopted our fiber-to-the-home strategy about four years ago when we identified the Tier 3 and 4 markets were demanding faster broadband speeds, more reliable service and choice of broadband providers. We spent the first year defining our underwriting, network design, brand and go-to-market processes and launched our first Glo Fiber markets in the fourth quarter of 2019. Since then we've made remarkable progress in refining our strategies and accelerating our network builds and customer acquisition. We now have in place a platform that we can leverage for the next several years. I'm very proud of how our team has rallied around our Fiber First strategy and our ability to delight our customers. I'll now provide an update on Glo Fiber results in the second quarter. As noted on slide 4, we had another record quarter with Glo Fiber data net additions of approximately 3,300 increasing sequentially almost 39% as our fiber network expanded and our brand awareness grew. Glo Fiber is quickly earning a reputation as the fastest symmetrical Internet service in our markets with excellent local customer service and fair pricing. The accelerated sales reaffirms our investment thesis that residents and businesses in our target markets want a high-quality option for their Internet service. We expect net adds to trend up as we continue to expand our network and awareness as the Glo Fiber brand grows. Turning to slide 5. We added almost 19,000 new Glo Fiber passings in the quarter and ended the second quarter with approximately 113,000 passings. We're well on our way to reaching our goal of 150,000 Glo passings by year-end. Our government relations team also made excellent progress in securing new Glo Fiber franchise agreements, adding approximately 72,000 new franchise passings in the second quarter and bringing our total franchise and government grant award passings to 330,000 or 89% of 2026 target fiber passing. We now have clear visibility in our fiber network expansion plans. With that, I'll now turn the call over to Jim to review the details of our financial results.

Thank you Chris and good morning, everyone. Please refer to slide 7 to discuss our financial results for the second quarter 2022. Broadband revenue grew 9.2% to $61.4 million, driven by an increase of 8.9% in residential and SMB revenue, due primarily from a 138.9% increase in Glo Fiber data RGUs and a 4.3% increase in incumbent cable data RGUs. Glo Fiber represented over half of our residential and SMB revenue growth and we expect that to increase in future periods as we expand our fiber network. Commercial fiber revenue grew 9.4% to $9.3 million due primarily to growth in circuits. T-Mobile backhaul revenue was consistent with the first quarter 2022. Broadband adjusted EBITDA for the second quarter increased 10.2% to $22 million, driven by top line revenue growth. Adjusted EBITDA margins of 36% remained steady with prior year and prior quarter as our results reflect higher than normal software upgrade and conversion costs and negative EBITDA from our Beam product. We expect adjusted EBITDA margins to improve modestly in the second half of this year from the decommissioning of the 20 unprofitable Beam cell sites and our software development costs begin to shrink. On Slide 8, Tower segment revenue grew $100,000 to $4.7 million in the second quarter, due primarily to a 3.8% increase in tenants. T-Mobile tower lease revenue was consistent with prior quarter. Adjusted EBITDA declined 1.4%, due to a slight uptick in expenses. Moving to Slide 9. Consolidated revenue grew 8.8% to $66 million in the second quarter due to growth in Broadband and Tower revenues of 9.2% and 1.9% respectively. Consolidated adjusted EBITDA for the quarter grew 16.4% to $18.6 million due to a 10.2% increase in Broadband adjusted EBITDA and an 8.6% decline in corporate expenses, driven by our previously announced cost reduction plan. $1.1 million of cost savings from professional fees or $4.4 million annualized was recognized in the second quarter. We continue to look for opportunities to drive cost out of the business. Moving to Slide 10. Free cash flow and cash on hand declined by approximately $50 million in the second quarter. We ended the quarter with a strong liquidity position of $433 million. We drew $25 million on the delayed draw term loans in July and expect to draw an incremental $50 million to $75 million by year-end. In addition, we now expect to receive $30 million in income tax refunds and $4 million from a refund of deposits from the CBRS spectrum auction to supplement our liquidity as we enter 2023. And now, I'll turn the call over to Ed.

Thanks Jim, and good morning. I will get on Slide 12, where we show our integrated fiber and cable broadband network. We continue our rapid fiber expansion and we had another record quarter for new construction. We added approximately 300 new route miles of fiber, bringing our total to over 7,900. We also had a record number for new fiber passings in the quarter with the addition of almost 19,000 in our existing Glo markets. Construction is also underway in our new markets of Lancaster and York counties in Pennsylvania; and Williamsburg and Suffolk in Virginia. We are on track to launch all four of these markets in the second half of the year. As Chris mentioned, the second quarter was a productive time for our government relations team, adding new franchise agreements for over 72,000 new passings, including Shippensburg, Greencastle and Waynesboro in South Central Pennsylvania; Ashland in Hanover County Virginia; and Sussex County our first Glo Fiber expansion into Delaware. In addition, Shentel continues to have success with government grant funding for unserved areas. We were announced as the winner of over $10 million in additional grants to bring gigabit fiber to a total of over 3,000 unserved locations in Frederick County, Maryland and Grant County, West Virginia. Turning to Slide 13. We now have approximately 411,000 approved Glo Fiber passings with franchise agreements in place. These are all greenfield builds outside of our current incumbent cable footprint. We are on track for our goal of constructing 75,000 new passives in 2022 and we are well positioned to ramp our construction to over 100,000 additional fiber passings in 2023. With our previously announced grant funding and our newer grant awards in the second quarter, Shentel has now won over $68 million in state and local grant funds to…

Certainly. Our first question comes from the line of Frank Louthan from Raymond James. Your question please.

Great. Thank you. Can you talk to us a little bit about the funding that you've gotten? And remind us how does that get -- how does that show up when you receive it? Do you get reimbursed on a percentage of completion basis or all the way at the end? And then how is that booked? Is it contract expense, or is it -- or how does it come in your numbers?

So the detailed agreements are still being worked out with each county, but we expect the grants will be dispersed on a cost recovery basis with a lag of three to six months on average.

Okay. Great. And as the T-Mobile progress, how is that relative to what your expectations were at the beginning of the year? Is it faster -- are they going faster than you expected or slower, or how would you characterize it?

Is that the T-Mobile -- you're talking about the turndown of the legacy Sprint network?

Yeah.

Okay. It's probably going a little slower than we expected. We've expected we would have seen a little -- a few more sites turned down at this time. So we're still not clear exactly when these terminated -- these circuits will be terminated or the tower leases that are month to month will be terminated.

Thank you. One quick follow-up. On the new backhaul that you renewed with them, how are the rates on that versus what they were paying before? What are you seeing on that front from a leasing perspective?

The rates are slightly lower, but they're getting significantly more bandwidth for the same amount of money.

Okay. Great. Thank you very much.

Thank you. And our next question comes from the line of Dan Day from B. Riley. Your question please.

Yeah. Good morning, guys. Appreciate your taking my questions. Just first for me on Beam. Curious, if you have any plans maybe in the near term to sell the spectrum you had licensed for the Beam fixed wireless now that you're kind of putting in that project? And maybe just remind us how much you originally paid for the spectrum rights related to Beam?

Yeah. So I'll comment on the plans for Beam. So we plan to continue to operate the remaining cell sites and support the existing customers at this time, but we have started to explore options for selling the spectrum holdings and we've actually classified those as assets held for sale.

Yeah. Dan, the original cost on the 2.5 spectrum was about $15 million. So we think the spectrum has held its value and probably appreciated a bit since we originally acquired it if we decide to sell.

Awesome. Thanks guys. Last time -- last earnings call you talked about some of the sort of backhaul systems upgrades and some of the other near-term kind of OpEx headwinds. Just maybe provide an update on those items for me? Thanks.

Sure. So one of the major projects was an upgrade of our ERP system. That has now been completed. All of our second quarter financials were running through the new ERP system. We've also made significant progress on some of our other upgrades including a new website for our cable business. And we've also deployed new systems to track our fiber construction for our Glo Fiber. So significant progress there.

Great. And then just last one mostly out of curiosity. I mean, it looks like in the incumbent cable side, you actually added more voice customers than you did broadband, which is pretty rare. Just anything going on there with the additions on the voice subscribers in the quarter?

Yes. So those are commercial voice customers. So we're seeing significant success with -- both from an SMB and enterprise perspective adding voice lines.

Yeah. Dan, we had one large sale that we -- large commercial sale that we booked last year and installed in the first half of this year and there was quite a few IP-centric lines on the voice side that it's referring to that got installed and increased the RGUs this quarter.

Great. Well, appreciate you all taking my questions and I'll turn it over.

Okay. Thanks, Dan.

Thank you. And our next question comes from the line of Hamed Khorsand from BWS Financial. Your question please.

Hi. Good morning. So first off on the income of broadband, are you doing anything different on the advertising to acquire new customers? Is your cost to acquire customers going up on that front?

I would say one major change. We did launch a new website for our incumbent cable business. And we can now take automatic -- we've automated orders over our website. So that's a significant change from what we had previously. So that actually brings our cost down slightly. But from an advertising standpoint, marketing standpoint we haven't made any significant changes over the past quarter that would impact our costs.

Okay. And overall are you seeing any changes as far as the customer payment habits or anything in that form?

We are continuing to see more customers shift to auto bill pay and e-bills. But we do still have our fair share of customers that come into our local stores to pay their bill every month.

Yeah. Hamed, we -- our involuntary churn did bump up a little bit in the past quarter, as did our bad debt. But our bad debt was really at record lows. It was running at about 0.5%, 0.6% of service revenues. It's now kind of up to 0.8% of service revenues, which is still very good. I think the COVID tailwinds had supported making it a priority payment by our customers. And maybe that's changed just tad, but still better than historical experience.

Great. And then, the last question was what's the biggest overhang as far as preventing you from adding more passings quickly this year, is it labor or is it more just government approvals?

No, it's really two main factors. One is make-ready work by the power companies. So as we're attaching to power company poles, they have to prepare those poles for us to attach. That's slowing us down and then, the municipalities themselves. They only want a limited number of construction zones within a given city or town. So that limits us as well. But we have not had issues …

Okay.

… with our own construction crews. We still remain well positioned from a labor standpoint and material standpoint.

Okay. Thank you.

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Jim Volk, for any further remarks.

Yes. Thanks everyone for joining us. We look forward to updating you on our Fiber First progress in the next quarter. Have a good day.

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.